New Guidelines Could Warn Against Ultra-Processed Food. The Food Conglomerates Don’t Want That.

Plus our business round-up: trouble for the egg industry, and putting the historic East Palestine settlement in context.

By Eric Gardner, More Perfect Union

It’s been an up-and-down year so far for America’s TV dinner giant. 

Conagra Brands, the Chicago-based maker of Healthy Choice and Banquet frozen meals, started the year off slow, selling significantly fewer frozen dinners than the previous year. Last week, the company posted a $308 million profit in the recent quarter. While that number is slightly down from last year, investors congratulated the company during its earnings call for reversing the earlier volume declines, primarily by offering in-store product discounts. 

Unmentioned, however, was an issue looming over all makers of “health conscious” ultra-processed foods: long overdue changes to federal dietary guidelines that could undermine the entire premise of some of Conagra’s best-selling items, and that the food industry is mobilizing to block.

Conagra Brands reinvented the TV dinner as we know it, reformatting frozen dinners into “healthier” options, tripling the cost of some items in the process but propelling the Chicago-based company to become the fourth-largest food manufacturer in the nation. 

In 2014, a box of Healthy Choice sold for $2.46; those meals now feature new brands like Simply, Zero, or Max. The latter packaging prominently highlights nutritional attributes like grams of protein, net carbs, and plant-based fiber—for about $1 to $2 more per meal. The company’s frozen Birdeye vegetables went from standard veggies to being covered in cheese and garlic, while climbing from under $1.50 to nearly $4. Banquet saw the biggest shift; its frozen dinners increased portion size and protein and tripled in price. 

Research from IRI, a data analytics firm that specializes in groceries, found that companies can charge five percent more if they make marketing claims like “organic,” “no artificial ingredients,” and “33 grams of protein.” However, if the company could reformate the product to include all three, “shoppers were willing to pay a ~25% premium, allowing it to command a price that more than offset the costs of adding the attributes.”

However, this entire strategy, which transformed Conagra from an afterthought to rubbing shoulders with General Mills and Hershey, could now be in peril. The Biden administration is mulling over the addition of warning labels to ultra-processed foods—a potential existential threat to the company’s entire business model.

The USDA publishes new dietary guidelines every five years. The guidelines serve as the foundation of government nutritional policy, informing everything from the type of foods that can be included in the National School Lunch Program to the structure of agricultural production. Right now, the dietary guidelines mainly pay attention to specific nutrients and don't consider how processing and additives can affect health.

This quirk allows Kraft Heinz to add a few grams of protein and whole grains to Lunchables, an ultra-processed product, and offer it as an option in healthy school lunch programs. “We don’t think anybody should regularly eat these products, and they definitely shouldn’t be considered a healthy school lunch,” Eric Boring, a chemist at Consumer Reports, told USA Today. Boring oversaw a recent independent study by the consumer watchdog that discovered high levels of lead and sodium in the product.

If the ultra-processed rule is enacted, food manufacturers could be restricted in marketing highly processed foods, with some potentially carrying warning labels.

Conagra has not responded to More Perfect Union’s request for comment on what changes in dietary guidelines would mean for its products and sales. Still, the processed food industry’s vigorous lobbying against the changes shows clear concern. According to Senate disclosures, the company spent $340,000 lobbying against the rule change in 2023. Since 2022, nearly two-thirds of the company’s political donations have gone to members of the House and Senate agricultural committees. (The new guidelines won’t be published until 2025, but an advisory committee comprised of public health experts will issue a report this year, according to the Washington Post.) . 

The industry argues that there’s no set definition of ultra-processed food, something that academics generally disagree with. “If you can make it at home in your kitchen, then it’s not ultra-processed,” a retired NYU Nutrition Professor told the Post.

Multiple food industry trade and lobbying groups have written letters against the change, arguing that industrial processing makes food safe. The American Frozen Food Institute (AFFI), a lobbying group representing frozen food and beverage manufacturers, wrote that the government “should not proceed with recommendations about the level of food processing as part of dietary recommendations.” 

A top Conagra executive, Tracey Beck, serves on the AFFI’s Board of Directors. 

Our latest video investigates the big food conglomerates’ ongoing campaign to get you addicted and make billions in profits. It’s straight from Big Tobacco's playbook — literally.

Norfolk Southern’s East Palestine settlement, in context

Norfolk Southern has agreed to pay $600 million to resolve all class-action lawsuits around the company’s role in the February 2023 train derailment in East Palestine, Ohio. The derailment, believed to have been caused by an overheated wheel bearing, flooded the town with toxic chemicals.

If a federal court approves the agreement, it will be the largest train-related settlement in U.S. history. But to put the settlement in perspective, the company spent $622 million repurchasing its own stock last year alone—$22 million more than the proposed settlement amount. (The company still faces lawsuits from the Environmental Protection Agency and the State of Ohio.)

Testing by the Ohio EPA has shown the city’s drinking water is now safe, but recommends that residents with wells continue to test their water. Concerns about the derailment’s impact on health, the environment, and property values remain. "This could be long-term for years and years,” a resident told an ABC affiliate.

The obscure metric driving Delta’s record revenue

Delta, America’s second-largest airline, posted record revenues to start 2024, a total of $12.6 billion. The success surpassed Wall Street’s estimates and was largely attributed to rising business travel and ancillary services, like the company’s American Express card, which generated $1.7 billion.

The average price of a domestic flight dropped three percent (adjusted for inflation) to $380 in 2023, according to the Bureau of Transportation Statistics. However, a key profitability metric has skyrocketed for the Atlanta-based carrier: the company earned almost 21 cents for every mile flown, a 25 percent increase from pre-pandemic times. This metric is known as “total revenue per available seat mile,” or TRASM. 

Generally, Delta is thought to charge a 20 percent premium compared to the industry for domestic flights, a premium that investors covet. “I think we are now generating premiums consistently,” Glen Hauenstein, President of Delta, said when asked about the company’s strategy to boost TRASM. “And hopefully, we can accelerate those over the next several years as we execute on our plans to differentiate Delta.”

Cracks in the egg industry’s shell

Last week, CalMaine Foods, the largest egg producer in the country, announced that it sold the most eggs in the firm’s history during the third quarter of 2024 — but saw revenue decline almost $300 million as the price of eggs dropped nearly 42 percent. 

During the same time last year, high egg prices sent CalMaine’s profits skyrocketing more than 700 percent. At that time, executives alleged that the overall supply of eggs declined due to bird flu spreading across its competitors, while CalMaine was immune, allowing the company to benefit from limited supply. 

But since then, the company has had a harsh comedown; not only has revenue plummeted despite high unit sales, but in December, an Illinois jury found the company and Rose Acre Farms fixed prices against food giants like Kraft during the mid-2000s. A jury determined that the giants intentionally limited egg supply and awarded the plaintiffs nearly $18 million.  

Last week, bird flu entered the picture. The company announced that it had slaughtered nearly 2 million hens and young hens after detecting bird flu at a Texas facility.